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Monday, April 03, 2017

The Wold Economic Forum released a piece on the Economist Intelligence Unit's Democracy Index 2016. It begins:

Democracy is in decline.

The Economist Intelligence Unit’s (EIU) latest Democracy Index 2016 shows 72 countries experienced a decline in democratic values last year. Countries with declining levels of democracy outnumbered those becoming more democratic by more than 2 to 1.

The EIU’s Democracy Index measures the state of democracy by rating electoral processes and pluralism, the state of civil liberties, the functioning of government, political participation and political culture in more than 160 countries worldwide. The EIU’s ranking shows the average global democracy score in 2016 fell to 5.52, down from 5.55 in 2015 (on a scale of 0 to 10).

According to the index, Norway leads as the world’s strongest democracy, followed by Iceland and Sweden. New Zealand comes fourth, with Denmark in fifth and Canada and Ireland in joint sixth place. Switzerland, Finland and Australia round off the top ten of “full democracies.”

I have written before about what I perceive to be a crisis in confidence among what are called the world's liberal democracies, but I do wonder about the value and validity of these types of indices. Do you think democracy is in global retreat? I have my doubts.

On 29 March 2017, the British Prime Minister signed a letter triggering Britain's withdrawal from the EU. That same day, the European Council released a very short statement in response. In supporting remarks, President Tusk said:

Brexit has made us, the community of 27, more determined and more united than before. I am fully confident of this, especially after the Rome declaration, and today I can say that we will remain determined and united also in the future, also during the difficult negotiations ahead.

This means that both I and the Commission have a strong mandate to protect the interests of the 27. There is nothing to win in this process, and I am talking about both sides. In essence, this is about damage control. Our goal is clear: to minimise the costs for the EU citizens, businesses and Member States. We will do everything in our power - and we have all the tools - to achieve this goal. And what we should stress today is that, as for now, nothing has changed: until the United Kingdom leaves the European Union, EU law will continue to apply to - and within - the UK.

Finally, I would like to say that we have just released an official statement by the European Council, in which leaders stress that we will act as one and start negotiations by focusing on all key arrangements for an orderly withdrawal. On Friday I will share a proposal of the negotiating guidelines with the Member States, to be adopted by the European Council on 29 April.

The withdrawal process was always going to be messy. In addition to the purely economic aspects, there are the questions of Gibraltar, the Northern Ireland border, Scotland and the EU citizens in Britain, UK citizens living in Europe. While the EU will no doubt try to be rational in its approach, its own interests and the complexity of EU decision processes provide little incentive for it to provide concessions to the UK. The EU itself will survive the process. I wonder if the UK can?

Finally, the Australian Government has announced the development of a new Foreign Policy White Paper, the first since 2003, to guide Australia's international engagement over the next five to ten years. As part of the process, all ambassadors and high commissioners were summoned back to Australia for a round table session, something criticised on the grounds of cost but which seemed to me to make perfect sense.

What do you think should guide that white paper/

As always, feel free to go to whatever topic or any direction you like. You don't need to be constrained by these topics!

21 comments:

2 tanners
said...

Brexit: according to classic trade negotiations analysis, unless Britain can hold out something unique which all the powerful EU members want, it's going to have an awfully thin time of things. And the compulsory 2 year deadline will not help it.

Foreign policy paper: From my previous comments, it's clear that I focus on aid and trade. I am mystified why governments of neither stripe appear able to focus on the benefits that aid offers to Australia and instead both do aid poorly and in ways that may not be in our long term interests. I had high hopes for the DFAT/Ausaid merger in 2013, which were very much dashed.

The negotiations are likely to be difficult, 2t. Specifically on trade, you might find this site interesting - https://fullfact.org/europe/uk-eu-trade/

Trade is going to be affected by responses to the negotiation process as well as broader trends in the global economy. I don't have an informed view here.

On aid,the earlier discussion here illustrated confusions in my own mind. As a simple example, the definition of development aid has become very confused. I have been meaning to write something here just to clarify my own thinking.

The definition of development aid, in my mind, is aid directed at the economic and social development of another country along a model which the donor finds tolerable. The adjectives altruistic and effective do not have any place in my definition.

Which makes them no different from other government policies.

Although I am still baffled why parties of all stripes find it so hard to be altruistic with other people's money, but simultaneously have a need to claim that they are.

Back on the negotiations, the biggest export the UK has to the EU is, I understand, financial services. Outside of megacorporations, I suspect that the approximation of a single jurisdiction as represented by the EU may be more comforting to the consumers of such services. And the City will swing a big stick to protects its patch. I can't see this finishing in any way other than tears for HM Gov and Britons in general. But the negotiations will finish on the stroke of midnight so I'm not expecting to hear progress reports for 18 months at least.

Disappointed to see the adjective "effective" discarded as applying to our development aid efforts :(

Jim, that site you reference regarding EU/UK involvement talks in $Bns - iow about 1/10th as much as is traded daily in our wonderful world of futures. Perhaps I'm reading it wrong.

Personally, I hope the Brits move decisively within no more than 12 months, and preferably less. If it be a wound, then cauterise and move forward. If not a wound, they will be wasting time padding out the timetable. Win/Win - where's the downside?

The EU is the downside. All 27 members have to agree to a new arrangement or else the UK is tossed out with nothing at all. That is why they are impossible to negotiate with, unless they actually want something. So Spain, which had been prevent to veto a Scottish advent has turned around to annoy England and to bolster their claims on Gibraltar. So Britain has to fashion an agreement in its own interests which will simultaneously appeal to Italians French, Slovaks, Poles and of course Germans. It is absolutely going to come down to the wire.

kvd, the type of transaction you are talking about re trading don't generally appear in the balance of payments stats. They reflect actual trade or capital flows.

The UK could just walk away I presume or do so very quickly, but there would be costs involved. They don't want to pad out the timetable, but they don't control the timetable. Its not just negotiations with the EU, but all the UK domestic issues that need to be resolved, policy and machinery.

Finally, some scientific evidence that sponging is a female attribute! Christian Porter should be advised of this:

First, because adult males virtually never sponge, any assortment would have to be based on some other (unknown) correlated trait. Second, sponging females have been shown to conceive from nonsponging males (13). Third, our focal data show that almost all offspring of spongers are sired by nonsponging males. Fourth, we did not observe the predicted heterozygosity deficit among all 13 spongers. Given the small sample size, this test is not statistically very powerful, but certainly offers no support for the existence of assortative mating.

Of course, context can be important: http://www.pnas.org/content/102/25/8939.full

As you expected, kvd, I did indeed laugh at this. As you say, context is important.

Leaving context aside as unimportant and focusing on the issues for Christian Porter, it would seem important in policy terms to focus on two issues. How do we control sponging females? And given that so many non-sponging males sire sponging females, what is the transmission process? How do we control this?

I must admit I don't have an answer. We need studies that might explain how sponging comes about, how it is transmitted. Given that sponging is clearly a female attribute, gender specific intervention would seem to be required.

I can now see what you're driving at tanners, having first sort of hiccupped at your very practical approach. But not sure where that takes you, regards perception and support within the 'donor' country. Or doesn't that enter into calcs?

On your "All 27 members have to agree to a new arrangement or else the UK is tossed out with nothing at all" - subject to definition, you obviously think that a bad thing?

"The definition of development aid, in my mind, is aid directed at the economic and social development of another country along a model which the donor finds tolerable."

I too see your point, 2t. Altruism may be a reason for doing, effective is concerned with results. Neither belong in the definition. A definite win for 2t!Actually, a very nice point.

kvd, assuming worst case that UK ends by just walking away. This would result in hard borders between Northern Ireland and Ireland, Gibraltar and Spain. Scotland would be very pissed off. EU citizens in the UK would become aliens, ditto for UK citizens in the EU. Existing supply chains based on an integrated market would be broken. All sorts of commercial contracts are likely to come under legal or commercial challenge.

My feeling is that the UK needs time to sort all the complexities through. Economically, the EU is more important to the UK than the UK is to the EU at the moment.

My own views on hard borders or otherwise in general have nothing to do with the case. Nor, does Scotland being always pissed off. And as for the economic consequences, something that is relevant, while I am glad that you are disagreeing politely, I have no idea why!

Jim, you raised 'hard borders and Scotland' not me :) As for economic consequences, perhaps a quote from the EU's own research into the proposition of 'free trade' between the EU and USA might illuminate:

Given the low average tariffs (under 3%), the key to unlocking this potential lies in the tackling of non-tariff barriers. These consist mainly of customs procedures and behind the border regulatory restrictions.

The non-tariff barriers come from diverging regulatory systems (standards definitions notably), but also other non-tariff measures, such as those related to certain aspects of security or consumer protection.

That says to me that if the UK were to be excluded from the EU club it would be reasonable to expect similar issues (and tariffs) to apply - yes? The UK presently contributes about 9Bn net to the EU. That's a little over twice the 'penalty' which would be imposed by the re-introduction of duties.

I think in all these things, expectations based upon 'worst case' will be exceeded, and expectations based upon 'best case' won't be met. It really is just the middle ground that is at issue - rather than some doomsday scenario.

kvd, accepting my arguments re altruism, effectiveness and aid, if an aid program can demonstrate effectiveness and appeals to an electorate's altruism, that can make funding it easier. My fairly gloomy conclusion is that OS development is expected to show dramatically large results in unrealistically short times, and that Australians are no more altruistic with their money that anyone else. That's why we are one of the stingiest aid donors in the OECD, and getting stingier. Rudd v1 was the last to propose increased aid, and he had a personal interest in it. Some of our schemes, like the "Reverse Colombo Scheme" are downright stupid. The Columbo Scheme assisted our universities and future decision-makers in other countries, making them at least favourably inclined to Australia. The Reverse scheme benefits well off universities, often in fully developed countries, and Australian students, using aid money.

I think the big issue at play in the EU and UK negotiations will be movement of people (including rights to live and work) and trade in services. The UK sells its services as a financial centre as its main export to the EU but I'm sure Berlin dreams of becoming "The City". Tariffs are irrelevant, it is the regulation of services to key sectors of the economy which will bite. How hard, I don't know, but Brexit will certainly make the British worse off.

Finally, trade negotiations: Teresa May has managed to tie up Parliament so that she only has to negotiate with the Europeans. The Europeans have to first convince all of their members that a clause is at least acceptable before trying to get British agreement. As such, they have a very limited ground to play in, a heap of market power and inflexibility will be their standard, just as it was when Britain dumped the Commonwealth to join the EEC.

kvd, I referred to hard borders specifically in the context of Northern Island and Gibraltar, both recognised as specific problems by the UK government. Scotland was a different set of problems.

You appear to be correct that the UKs net contribution to the EU is around 9 billion pounds - https://fullfact.org/europe/our-eu-membership-fee-55-million/. While a small proportion of total UK public sector spend, this is still significant.

The notional EU tariffs that the UK exporters might have to incur are relatively low, although there appears to be a fair spread. However, with supply chains, a 3% tariff has to be related to profit margins, not total costs. Arguably of more importance are the added record keeping and process difficulties involved in supply as a consequence of the introduction of customs barriers.

I agree that the end result will be some way between worst case doomsday and the optimistic prognostications of the Brexiteers. However, you will remember that you wanted that your original point was do it now and get it over with. By implication, that minimised the costs. That is not clear to me.

Wasn't suggesting the 'do it now' approach was to minimise costs, Jim. Was more along the lines even Bill Shakespeare noted: 'twere well It were done quickly. Agonising over imponderables is something any good PS is brilliant at, but with the usual dismal results afaics.

However, if you feel it would also reduce costs, then that's just another reason - no?

I think it would maximise costs, kvd. And we are not talking imponderables, but very specific tangible things.

I'm not sure that Australia has a real aid program anymore in the sense that you use the term, 2t, although I stand to be corrected. Aid funding has been used to pay for border security (external protection), certain public health stuff (reducing threats to Australia from disease), schooling to reduce the terrorist threat (external security), famine relief etc. I don't know how much goes to economic and social advancement except as a by-product. I need to study the aid budget!

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